Competition watchdog will investigate the baby food market as costs rise
- CMA: Baby food prices increased 25% between March 2021 and April 2023
- Sarah Cardell, CEO of the CMA, noted that prices remain at “historically high” levels
- Danone currently dominates the UK infant formula market with a 71% share
Britain’s competition watchdog is conducting a market investigation into the infant formula market after discovering that consumers can save money by choosing cheaper brands.
a Report from the Competition and Markets Authority A food sector publication last November found that Brits could save more than £500 in the first year of a baby’s life by switching from a ‘premium’ brand to alternative options.
In addition, the study found that the price of baby food increased by a quarter between March 2021 and April 2023.
Warning: Some supermarkets cut Aptamil prices last month, but CMA CEO Sarah Cardell noted baby food prices remain at ‘historically high’ levels
Formula milk manufacturers have attributed the price increases to higher ingredients, energy and transportation costs and the impact of climate change on agriculture.
Some supermarkets, including Asda, Tesco and Sainsbury’s, cut Aptamil prices last month, but Sarah Cardell, the CMA’s chief executive, noted that prices remain at “historically high” levels.
The CMA will now investigate infant formulas sold to consumers without a prescription, such as ‘anti-reflux’ and ‘comfort’ formulas, as well as ‘follow-on milk’, and ‘growing-up milk’ and ‘toddler milk’ marketed. children at least 12 months old.
Regulators will also look at the supply side characteristics of the baby food market, such as barriers to entry and growth, and the effect that regulation has on market outcomes.
They can require companies to hand over information as part of their market research, rather than relying on them to provide it voluntarily.
Aptamil owner Danone currently dominates the UK market with a 71 percent share, followed by Nestle, which produces SMA and Little Steps, with 14 percent of total sales.
Other formula makers, Kendamil and HiPP, have market shares in the low single digits, while own-label brands make up a small portion of sales.
The CMA plans to collect information about how consumers behave, what drives their choices, and the facts and advice used to support those decisions.
Cardell said: ‘We are concerned that parents do not always have the right information to make informed choices and that suppliers do not have strong incentives to offer infant formula at competitive prices.
‘We are committed to making sure this market works well for the many new parents who rely on infant formula, and it is essential that any changes we propose are based on evidence and a good understanding of the market.’
The CMA hopes to publish a final report on the issue sometime in September, which could include recommendations for government change policy or the imposition of competition law enforcement against certain companies.